People who think about investing in a fund should be clear about their own personal investment profile beforehand. What are my investment goals? How great is my appetite for risk? (How do I find the right fund?) The investment profile forms the basis for the selection of a suitable fund. On the other hand, you should of course also get an overview of how a particular fund performs so that you can assess whether it matches your risk and investment profile. For this purpose, the key indicators of the fund are summarised on a so-called “factsheet”. But what does this information tell us? We would like to explain the basic contents as well as certain indicators to you on the basis of the product sheet structure. The indicators should then provide some clarity about a fund. Your Raiffeisen bank advisor remains at your disposal for any further questions.

Volatility

The implicit volatility is stated in per cent and is an indicator of the risk assessment of an investment. For instance, a value of 20 per cent means that the price of the fund can be expected to increase or decrease by up to 20 per cent with a 67 per cent probability over a certain period of time. The historic volatility tells us how strongly a fund has fluctuated around its average value in the past. Please note:

• The volatility does not show how great the maximum price fluctuations were.

Sharpe ratio

This indicator provides information about the risk-return ratio of a fund. It states the achieved returns in relation to the incurred risks. It was developed by US economist William Sharpe, who was awarded the Nobel Prize in Economics in 1990. The Sharpe ratio tells us how a fund has developed in relation to the volatility of its portfolio. The ratio is stated in absolute numbers. The higher the value, the greater the likelihood that the accepted risk will be compensated for:

• If the value is greater than 1, then the fund has delivered greater returns relative to the incurred risk (expressed as the volatility).

• If the value is between 0 and 1, then the returns are above money market interest rates, but are not commensurate with the calculated risk.

• If the Sharpe ratio is expressed as a negative value, then the returns of the security fall short of a risk-free money market investment.

The Sharpe ratio allows us to compare the past performance of different investment funds. Please note:

• The Sharpe ratio is most accurate when very similar funds are compared with one another.

• This indicator relies on data from the past and cannot be used as a reliable indicator of the future risk-return profile.

Maximum drawdown

While the volatility covers the entire average fluctuation margin of a fund (both up and down), the maximum drawdown represents the greatest temporary decline in the value of a fund. It generally expresses the maximum cumulative loss relative to the highest price within a specific period as a percentage. The higher the value, the greater the maximum loss that investors could have suffered within a certain period. The maximum drawdown is one of the indicators used to assess the risk of an investment fund. It must be taken into account, however, that this indicator does not tell us anything about the frequency of substantial losses.

Yield

This is the earnings of an investment that is achieved over the course of one year. The yield is always stated in relation to the amount of capital invested by the investor, and is therefore expressed in per cent. It is an important aspect used to measure the success of a capital investment. If all the costs for a capital investment (in this case, for a fund) are included in the calculation, then one speaks of “net yield”.

Remaining term

This is a popular indicator for bond funds, and it states the time until maturity (repayment) of a bond. This is no small matter when assessing the returns and risks.

The bonds in a fund have different terms. As a rule, if the general interest rate level increases, then bond prices will decrease. The shorter the remaining term is for a bond (e.g. two or three years), the less impact interest rate changes have on its price. Government bonds with a term of 100 years, however, have a significantly higher interest rate risk but also have higher earnings potential.

Duration

The duration is an indicator used to assess the risk of bonds. This denotes the period of time it will take for the investor to recover the invested capital. In contrast to the remaining term, the duration also includes interim payments such as interest earnings.

Rating

Ratings are not only used to assess the creditworthiness of companies or countries, but can also apply to securities (bonds) that have been issued. They are compiled by special rating agencies according to a systematic approach. The best rating is denoted by “AAA” while the worst is depicted by a “D”. For investors, lower ratings mean a greater risk as well as greater earnings potential. Raiffeisen KAG fund management primarily invests in bonds with higher ratings (investment grade: AAA to BBB) through its bond funds. However, there are also funds that specifically include bonds with lower ratings, since these have higher yields.

Date of distribution

Disbursements are made on or after this date. If the date falls on a weekend or a holiday within a particular year, then the distribution can be postponed (for example, to the next day of the week). The Austrian Investment Fund Act requires the distribution to take place within four months after the end of the financial year.

Fund financial year

Just as companies have a financial year for accounting purposes, funds also have a financial year or accounting year. This is the reporting period for which the development of a fund is documented and evaluated by an auditor. Once the financial year is over, the asset management company determines the amount of the distribution.